Nebraska Forecasting Board Raises 2022 and 2023 Tax Revenue Projections Again
The Nebraska Economic Forecasting Advisory Board met this week to forecast revenue figures that the Legislature will use as it takes up debate on the state’s mid-biennium budget in March.
Revenue projections for the current fiscal year and FY2022-23 were raised based on anticipated increases across all tax receipt categories, including a projected $160 million increase in individual income tax receipts in FY2021-22 and a $200 million increase in individual income tax receipts in FY2022-23.
The board voted to raise estimated net total tax revenue this fiscal year (FY2021-2022) by $370 million to $5.72 billion and next fiscal year (FY2022-2023) by $405 million to $5.96 billion.
The sentiment felt by the board was that while Nebraska’s economy is strong, there are factors that continue to impact the overall economic picture:
- Historic inflation levels
- Increased wages and salaries
- Worker and contractor shortages
- Supply chain disruptions
- High transportation costs
- Lack of available workforce housing
- Federal COVID relief money that has yet to be spent
Multiple members mentioned a pent-up demand for new construction of homes and buildings as well as new vehicles and farm implements, but for now, many are holding out until improvement in the above factors are seen.
Also of note, the situation in Ukraine was mentioned by several board members. There will be global impact, and that impact will flow to Nebraska. Ukraine purchases agricultural products produced in Nebraska. Representatives with the Legislative Fiscal Office and the Department of Revenue also commented that the Federal Reserve may opt to raise interest rates more slowly.
As the Legislature prepares to debate the mid-biennium budget and several tax proposals, these increased revenue projections are sure to have an impact.